looking at the third straight week of losses for the dow. now that is not the case. it would have been the first time this year. >> not a bad way to end the week, at least for us folks, but still an hour to go. should be a biggie. >> indeed. "the closing bell" is next. welcome to bell bell. i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. what a day this has been closing out the week on a pretty high note as fears about escalating tensions in ukraine subside this afternoon. now the major averages have all turned positive not only for today but for the week. you never know what can happen in this final hour of trading. up 137 on the dow. >> we were about to have a three-week losing stretch for the dow. now up decisively. ing out of stocks and dumping

junk bonds too. we'll discuss whether this aversion to ris sk a red flag now or perhaps a sign of capitulation. >> a minor bounce this morning even with the big sell-off in asia last night. up 162 for the peak for the dow now up 135 points. all the other averages higher as well. the nasdaq's up 30 right now, trading at 4,365. and the s&p has come back quite a wit bit from lows of last night, now up 16 points at 1,926. rich peterson from s&p capital iq. monica meda. bill willis from princeton

securities. and rick santelli as well. ben willis, let's start with you on this crazy market day. is there any doubt now that this market is influenced greatly by geopolitics? >> i hate to start off this way, but i don't believe it's geopolitics. i think geopolitics is part of the fuel that's triggering the currency markets, which is really what's been driving the technical levels of this market. we hit 1,890 on the s&p futures this morning, a critical line that happened to be 4:00 a.m. before most of us were even up. but kelly and i were chatting the other day and i said that is the line we were most nervous about. we have been in these technical moves as far as the technicians who have quite frankly not been right all along for several months, but the last few days you've been chatting with art cashin, seeing these numbers. but i believe the trigger has been the currency moves more so than necessarily the geopolitical moves. >> let me push back a little bit. how do we explain, then, last

night's big selloff in the asian markets when word got out about the president authorizing the military strikes over northern iraq? the nikkei finished down 3% last night and then this afternoon, when word got out about the russians pulling back from the ukraine and suddenly we have 162-point gain in the dow. >> look at what happened the dollar/yen market in those carry trades, look what happened against the euro. the dollar actually gave up a little bit today, which it's been on this tear which i think has been putting the pressure on the broader indices. but the west market going back to the lead-in has been the cleanest shirt in the hamper so, to speak, compared to the other world indices. we've held up pretty well compared to germany and france and the like. again, i understand your point but won't give in to it. >> all right. okay. >> jason, how much is this -- >> i'll give in to it. sure, i'll give in to it. bleets real about this. the markets are up significantly from their lows in 2009. we've gone from ten times earnings to 17 times normalized

earnings. not to say we're overvalued dramatically. we're a bit above the historical averages. at the same time, bond yields, high-yield bond yields have come down to 5% in some cases. bank loans have come down. we've seen a flow -- inflows into those areas. now what's happening is you've getting an introduction of additional aspects of risk. the geopolitical risks are really just an excuse for the markets to kind of correct a little bit, take a little bit more of a breather. >> so you're with -- >> well, look, it's an excuse for right now because nobody really knows exactly what's going to happen. the base case, the most likely occurrence in the majority of these circumstances is the circumstance unwinds, the fears end up drifting away. and we end up back to highs. that's just the base case or the majority of the circumstances. there are some circumstances you could outline where the sanctions get in place for a

long period of time nape get harsher. there's an economic impact. that affect earnings and therefore is fundamental in nature. but that has perhaps still a lower than normal percentage chance of occurring. >> monica, there is a precedent for this kind of market action in the past few years. we expect or think we need 10% correction, we get 5%, then they come back and start buying this market again and it has happened yet again today. right? >> well, i can't tell the future through a crystal ball, but we are seeing a volatility and you'll continue to see a lot of it. there's no reason to feel comfort in the geopolitical environment pip see an angry smile with russia, so i don't believe that things are calming down in that region. what you have here is structural issues with the economy. you have a tale of two cities, some consumers doing well, some consumers not doing well, just coming out with earnings from walmart, earnings from mcdonald's. and we have done very little to

actually address those structural concerns of consumers. they still feel a great deal of financial anxiety, and until we make changes in our economy, you're not going to really have the fundamentals that you can count on for the economy. >> it's a good point. the answer seems, to rick santelli, well, just loosen credit standards. >> well, we could argue about credit standard. there's two ways to look at credit. it's what the big boys can get, what everybody else can get. it's more availability sometimes. listen, after everything we've seen today, the ten years unchanged, five years unchanged, 30 years unchanged from yesterday, obviously we're eight basis points lower on the week and looking at a new low yield close on a weekly perspective. you know those holiday globes, you shake them up and all the snow moves around, that's the way best to look at what geopolitics is doing in the marketplace. yes, it made things murky. this isn't our grandfather's market. every spectator wants an enl um. last night in thin trading the s&p moves, a lot of speculation.

in the end, should this market be taken down in equities or continue a big move the interest rates, it's not going to be the speculators but the long holders and the long holders will see through the geopolitics and those issues will come clear next week. we can look at european gdp, look at the diamondbacks on monday to see which side of 9,000 it's on. yes, the risk trade in the end has been lagging. pay attention. but maybe most important of all is that the equity markets in the u.s. continue to be more volatile and the interest rates pay attention when it goes down. but as evidenced today, about the last 80 points have been unanswered as the yields stick and i think that the credit markets are still the adult in the room. >> maybe it's fitting that we save the earnings guy till last year, rich peterson. i mean, the fundamental -- >> priority of investors these days. >> it did seem to take a back seat to some of the geopolitics, ben willis notwithstanding. >> sure. talk about geopolitics, what's affecting geopolitics, is the credit markets. we broke below 240 on the

ten-year recently and that could be a benefit in a way to home owners, that they have the opportunity to refinance, put some more money in their pocket. talk about the correction. maybe 5% is the new 10% whereby we had to pull back from approaching 2,000 on the s&p, 1,900. we talk about earnings again, 10% on the -- for the second quarter numbers first time we broke 10% since the third quarter of tweb 2011. >> only if you strip out citigroup, right? >> including financials. if you x financials, numbers were even better. seeing big gains in terms of where we started a month ago. a month ago, alcoa reporting. since then, health care has done very well. we were looking under 7% on health care, now we're over 16%. seeing improvement in materials, improvement in technology. and third quarter numbers have come down, this year third quarter numbers looking for about 10%. >> what about the consumer names back to monica's point here? are you seeing more pressure on

the consumer discretionary? granted we're not eating as much breakfast cereal, but it is down 17%. >> you have consumer discretionary. you have to look at a wide variety. the home builders, they may be a beneficiary of some of the refinancing and improvement in the job market whereby homeowners or buyers can go out and make a down payment. i think, you know, going forward, you know, we still have the target 12 months out of 2,100 on the s&p 500. >> speaking of which, ben, what levels are you watching right now? what are you looking for and what are you doing about it here? >> i'm actually pleased to see we got up to the levels we are right now at the 1,920 level. we broke through that, it was last earlier in the week we were asking art cashin as the trap door fell out. it's important for us we continue to stay above that level, we go into the close, otherwise we may visit that 1,911 level again. hopefully not the 1,890 level. but as rick said, the bond market has always been the adult

in the room nap goes without saying. effect of geopolitics, to your point, bill, the effect will be seen in the bond market, the u.s. treasury, as a safe haven. once again the mattress for equity investors while they try and figure out what is going on. >> jason, as we head into the weekend here, do you think then this mini correction, we shouldn't even use the word correction, but in many cases behind us now or is it possible today's trading action is evidence of some sort of short squeeze and that trend reasserts itself next week? >> look, i mean, there's been some information today that pushes us back into positive direct your attention. i don't think we're necessarily through all of the news out of russia, ukraine, out of iraq, and abroad. there's stale lot of things out there. on the whole, whether it's this weekend or next weekend or the month following, i still think the base case is we're going to be grinding high we are this equity market, even though we're already overvalued. the earnings are going to continue positive. the economic movement is in the positive direction. unless we have something

material that derails that, we're pointing in that direction. it just won't be as strong of gains as we've seen in the past. >> all right. >> and that may, you know what, bill, be good news for everybody who's worried that stocks, in fact, were rising too far too fast. >> didn't happen this week. >> all right. thank you, folks, very much for your thoughts. have a good weekend. see you later. >> 50 minutes to go here, the dow up 130 points, about 30 points off the highs but sitting right about 16,500. the nasdaq adding about 28, the s&p 16 points to 1,925 here. >> meanwhile coming up, customers not exactly loving it right now. mcdonald's sales taking a hit from a food scare in china, lackluster demand here in the united states. the pros are going to debate if now is the time for investors to bite into the world's largest fast-food chain or not. >> grizzly. >> also on the docket, a former u.s. ambassador to iraq weighing in on the latest military action there and if american boots on the ground could be in the future.

>> and when we come back, a poignant story, the world health organization declares the ebola epidemic an international health emergency si. our meg terrell has the latest. in india we have 400 million people who don't have electricity and i just figured that it's time i do something about it. what we're doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. i think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when it's needed by the consumer. a smarter energy system is made with the ibm cloud. the ibm cloud is the cloud for business.

signs today of pretty good bound for the stock market stemming a tide of selling it started overnight in asia, continued in europe this morning, but now we are decently positive here. the dow was up 162 points, now it's gain of 140. nasdaq's up about 30 and the s&p up 17 points at this hour. >> the world health organization declaring the ebola outbreak an international public health emergency. >> meg terrell joins us now with the latest developments on this important story. meg? >> new figures out today show the virus continues its spread an additional 68 cases reported in the west african nations of guinea, liberia, nigeria, and sierra leone as well as 29 deaths. that brings the total cases to 1,779 overall, and of those 961 people have died.

there are no drugs approved to treat ebola but there's been a lot of talks about medicines in development. this week we've been exploring that topic, when patients turn to experimental drugs as a last resort in all kinds of diseases including cancer. though a system has been in place in the u.s. since 1987 patients still fall through the cracks and pressure is building on it to change. compassionate use is a last resort for sickest of patients, like natalie trawler, a 15-year-old, who's been battling an aggressive cancer for two years. >> when we found this new promising medicine, pd-1, we definitely wanted to participate in the trial and we asked for compassionate use but they denied it. >> reporter: companies can use compassionate use to give patients access to experimental drugs outside of clinical trials.

>> there are three parties in these expanded access programs -- the patient and their doctor, the fda, and the pharmaceutical companies. and all three have to be in agreement if the drug gets to the patient. >> it is not a simple path, and a swell of public outcries is putting pressure on the system to change. one issue, a lack of guiding industry principles. >> is there an individual sort of arbitration process that can be put in place or should there be a universal sort of set of principles that regulators and companies might agree to that won't be compromised in the face of a strong public pressure campaign. >> another initiative is right to try, a law that's been passed in three states and is being considered in several others. the goldwater institute designed the laus, which remove need for the fda to sign off on compassionate use requests. >> as soon as a doctor tells the patient that there is a promising drug for you, the patient can then go out right

away to the company and seek that approval. and that's going to cut down on the time that patients have to wait enormously. >> the fda counters that the laws are focused on the wrong place. of 977 applications for compassionate use that made it to the fda last year, all but three were granted. bioethicist art caplan puts trigt try a different way. >> right to big laws. >> reporter: and he says other that i think chaengs are needed, including funds for patients to get treatment and travel. in addition to getting medicines pushed faster, they can make other changes. >> the fda probably could be a little more flexible, probably need to have some reform there to say if people die taking experimental drugs we won't hold that against the drug in terms of the approval process. >> reporter: the focus on compassionate use has risen to a federal level with the push to gain more data on how the system's working. any changes, though, may not come soon enough for patients like natalie trawler and the many others battling diseases

with no good options. >> every day that we don't do something or don't try to fight the cancer like that's another day that the cancer can grow and get worse. so we just -- we always feel that in the back of our mind that pressure, that there is a time limit. >> so there's a rising tension on the system, and of course the situation with ebola raises questions of ethics and inequity when it comes to short supply of experimental drugs, something the world health organization plans to explore in a meeting early next week. guys? >> meg, it's great reporting on that. i had nod noed idea that was the way they were considering a lot of these treatments and of course are concerned with the patients and wondering if you have any updates about the patients being treated for ebola in atlanta. >> actually, dr. kent brantly, one of the two being treated there, put ow out sta a statement from his isolation ward at emory saying he's under the care of great people and getting stronger every day.

that's good to hear. >> keeping our fingers crossed there. best to natalie as well. great reporting, meg. thanks very much. >> thanks, guys. >> can we quickly show what's happening with shares of one of the pharma companies? speaking of one of these treatments which may be alouzed to be used for things like ebola. tekmira up 35% today. >> incredible. it's been that kind of a day weather 40 minutes left in the trading session, the dow up 144 points, was up 162 just like that this afternoon. and it looks like we're going to go out positive for week with these major averages. >> a big turn from how things looked in the overnight session. mcdonald's sales, here's a global indicator for you, slumping thanks to a food scare in china and week waek demand in the u.s. shares down 8% in the past three months. should you buy the dip now? >> also later we'll check in live from paradise to see how hawaii is faring from the

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strikes over iran. jeb bu >> according to officials, more strikes occurred on a target northwest of erbil today, the city that's been at the center of so much of this fighting, but the attacks occurred by the united states not once but twice here after the first strike, u.s. warplanes returned a short time later to hit the target a second time. that reporting courtesy of nbc news' jim miklaszewski at the pentagon. the associated press is reporting a spokesman for iraq's human rights ministry says hundreds of women from the y yezidi have been taken hostage by the group we're calling isil. that is central to this whole united states intervention here, what the president is casting in terms of a humanitarian intervention to protect that minority group, many members of which are trappeded on the top of the mountains and surrounded by hostile isil forces. we'll have to wait and see what

this military strike was all about, whether they hit their targets and whether these strikes continue throughout the afternoon and evening, bill. >> does it rule out these atax were basically at the base of mt. sinjar? >> the attacks by the united states occurred on a target northwest of erbil today. one of the things the president has laid out is the united states would move in militarily with strikes to protect erbil with the isil forces moving in that direction. this would appear to be related to that effort separate from the humanitarian effort, but that's my reading of the tea leaves here on this reporting we've just gotten in. >> thank you very much. we'll leave it there for now as we watch markets for any kind of reaction. not seeing much of one, the dow up 153 points, strong session for the s&p and the nasdaq. >> if anything it's gone higher since word has gone out. problems for the golden arches. today mcdonald's posted lower

than expected sales thanks to that food scare in china and lackluster demand once again here in the united states. sarah eisen has the story. what's going on with mickie ds? >> pretty ugly numbers for mcdonald's for the month of july. two problem spots for different reasons weighing on growth. the immediate concern is asia. the impact of the expired meat safety scare from a local supplier. mcdonald's had actually pulled mcnuggets and other items off the menu far bit. it's working to source the meat elsewhere. consumer trust, though, is going to be hard to predict as we learned with yum! brands last year. it also had a food safety issue hitting kfc sales pretty much all year. what we saw in july, it's already having a 7.3% decline for same store sales during the month. analysts say it's going to be very difficult to predict and could weigh on mcdonald's results for several quarters to come. the region is 10% of mcdonald's total business. the other problem that's been plaguing this company and the stock for months now, u.s. drop

in sales and in july it got worse, 3.2%. we've been seeing that the low-income customer, middle, low-income, mcdonald's core customer, ha had trouble. you see that in walmart, in some of the other fast-food chains as well. healthier is in, another trend that's working against mcdonald's, chipotle certainly killing it when it comes to same store sales. the competitors, burger king and wendy wendy's, have been posting growth the last few quarters. their moves on menus connecting bet we are diners. it raises questions about management and strategy. the ceo, don thompson, his tenure has been marked by declining sales in the u.s. and abroad. he's had a number of failed attempts at revamping, emphasizing the dollar and more. the stock has underperformed and the broader index underperformed when it comes to other restaurant stocks as well. weathering the recession, guys, pretty well, and the few years before that, i mean, amazing growth for mcdonald's for the

stock. we'll see how patient investors can be right now with some of his new moves as he tries to connect. >> was he the ceo when they sold their stake in 2006? >> no, he was not. he came on board i believe 2012. i have to check that. but the stock is only up about 5% since he came on and you know what the major averages have done in that time period. >> yep. we've seen what it's done the last couple months. it's been tough. thanks very much. more breaking news, this time with john ford. john, what do you have? >> appears a judge in california has denied preliminary approval of a settlement between apple, google, intel, adobe, and tech worker who is allege that a number of firms colluded to prevent poaching of workers from one company to another. the settlement was going to be for $324.5 million, but the judge saying the settlement falls below the range of

reasonableness. from what i can see it's judge lucy coe in san jose who was overseeing this, the same judge looking at the apple/samsung case before her, saying that this falls below the range of reasonableness, so it appears perhaps they have to go back to the drawing table here with this settlement of $324.5 million. the judge denying it. bill? >> wow. john ford, thank you very much. google shares not showing too much of a hit on that but there's a lot of factors the consider as they're up about 1% for the day. >> meantime, back to the highs of the day right now. dow up 163 points even though we've heard about yet another usair strike over iraq at this hour. >> as mentioned, rel rheally the russia/ukraine situation holding the key to whether geopolitical tension reasserts itself in these markets. speaking of russia and ukraine, in crimea, by the way, was one place where mcdonald's was pushed out and russian local versions came in. i'm not kidding. we want to pick up on our

discussion about mcdonald's right now, the challenges it's facing, lee munson from portfolio asset management. just outlining the difficult july that mcdonald's has had. kevin, just curious, given the amount of capital looking to return to shoulder here, whether the downside for this name is going to be limited. >> i think that's right. you're looking at a stock that's coming up around a 3.5% dividend yield. the dividend is very, very well covered by cash flow when you look at the credit, the credit is an incredibly good credit. from a longer-term perspective, i would say that this price today makes a lot more sense than it did a little while ago. so if we're a long-term perspective, this is something for the portfolio, but there are some headwinds as you mentioned, and the stock could pull back a bit more so be cautious if your perspective is shorter term. >> for that reason, lee, you are cautious and you don't like the stock here, do you? >> well, no.

you know, here's the thing. this is the agony and ecstasy of buying individual stocks in a portfolio versus say index approach. remember in 2008 mcdonald's, walmart, the only two things in the dow jones that went up because the market knew there would be a lot of poor people needing 99 cent cheeseburgers. fast forward, china food scare aside, every new person that gets a new job in america is going to wonder why am i poisoning my body with this stuff? they had a good strategy with mccafe versus starbucks, other thing, but people are saying why am i going to a grimy mcdonald's if i can save a buck or two more and go to chipotle or panera? not saying buy those stocks but that's where they are in the business cycle. more efficient ways of hedging a portfolio for a recession. >> okay. kevin? >> yeah, well, lee makes a good point. i mean, obviously, you want to own this as part of a diversified portfolio, but also

to pick up on what lee was just saying, this company has been around for a very long time. it spun out other businesses that have been very successful. it's transformed itself many times. it has improved its margins dramatically over the last ten years or so. granted that improvement has stalled out recently. but the company keeps buying back its shares. it's going to have to address its menu and pricing. it's incredibly efficient in the kitchen. it's got to improve that further because it is a competitive market. it is a longer term perspective you have to take on it. obviously lee is correct as far as this wouldn't be your only stock that you would own in a portfolio. you have a long-term perspective. it's a better value than it was a little while ago. >> you said it, it's been around a long time. is it possible it's just mcdonald's fatigue on the part of the public, there are too many options out there for them right now? >> yeah, you also mentioned burger king, lots of other companies that have been out there that have been around a long time doing just fine an it

doesn't require tremendous growth. this company doesn't need 10%, 20%, 30% growth to sup sport its valuations. the valuations are reasonable particularly looking at the cash flow the company is throwing off. all it need to do is improve its growth rate, get it back um there, you know, fix the menu, do some things to compete and get that growth rate up and you could see some nice judgment side. it's a longer-term perspective. >> in a word, lee, what price mcdonald's trading at 93, would you get interested in these shares? >> i would wait untilitis so hated on the street that nobody wants to look at it then basically you say i'm going to speculate and go fwamable and buy something and put -- >> not there now? >> going to have to come down a lot longer. going to have to look like russia in about two weeks before i'm going to do it. again, people need to remember, this is an awful lot of work just to try to find a good blue chip. i'd rather get unexpected returns in stocks, and if i need something safe i'd rather buy some short-term treasuries than

try to pick a safe stock, because there ain't any. >> all right. good to see you both. thanks for joining us. >> thank you. >> yep. >> heading toward the close, up 165, so highs of the session right now at least for the dow with about 25 minutes left in the trading day here. the s&p is up 20 and the nasdaq continues higher as well, up 36 points. >> that is all as you just heard from eamon javers, a second round of air strikes in iraq. we'll gate prognosis on what's next from the former u.s. ambassador to iraq. the cadillac summer collection is here. ♪ ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month

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welcome back. if you're just joining us, your eyes do not deceive you. we are in rally mode, yes, the dow up 164 points, yes, a rough couple weeks but not today, especially this afternoon, when word got out that the russian armies had finished what were called their military exercises around ukraine and they were pulling back and that seemed to spark this rally. the dow is about at the highs of the session here with the nasdaq up 35 and the s&p up 20. >> among all the geopolitical

issues rippling through market, the pentagon confirming air strikes in iraq and nbc news reporting the u.s. military launched another round of air strikes as well. >> joining us, a man with firsthand experience on the ground there in iraq, ambassador james jeffrey, the former u.s. ambassador to iraq from years 2010 to 2012. mr. ambassador, it's great to have you with us, sir. thank you for joining us. >> thank you for having me. >> what do you make of this latest development and how long do you think this is going to last? >> well, this was an important decision taken by the president. the president back in june after the isil/al qaeda affiliate o r overran mosul and much of the sunni arab part of iraq, was taking basically a wait-and-see approach. we would up our intelligence and our support to the iraqi army and to the kurds in the north, but he didn't really want to do air strikes until we could have a more inclusive government, and the iraqis are in the midst of forming a new government right

now. what changed the equation was the isil offensive into the kurdish arias, isolating the yezidi kurd on sinjar mountain and threatening erbil and american interests and personnel and calling his bluff. >> how shockd are you by this behavior, snams have you ever seen anything like it? >> there are examples in military history of groups that have moved forward and started conquering lots of territory. the important thing is they're not working through areas where the population is sympathetic to them. the population as we've seen on sinjar mountain is horrified of these people because these are al qaeda terrorists, will ethnically cleanse them at best, slaughter or massacre them and create many genocides at worst. that's why they have to be stopped. >> so, you know, speaker boehner has said there need to be a long-term objective to this mission articulated by the president. do you have a sense of what that is? i mean, is it the destruction of the isis or just sending them

back to their newly occupied territory or what do you think that longer term objective should be or is? >> i think the president laid that out on the 19th of june. it is to work in the region diplomatically. it is to work with the forces that we have good cooperation with iraq. the iraq government. and we want to see it on a new leadership. the kurds in the north and the sunni arab tribes with whom we still have good ties to eradicate -- and the president was using very strong words back in june -- eradicate this isil presence in iraq and part of syria. that's his long-term objective and there can be no other. this is like the taliban and al qaeda in afghanistan before 2001. but it's even more dangerous because of writ's located in the middle east. what we're seeing now though is the other side having a vote and taking the offensive and carrying the fight to other arias, and that fortunately g e givgiv

gives us a military target. we don't have to worry about a counterinsurgency to stop these guys. we have to use air strikes from above and local forces on the ground. that's what he's trying to do. >> you raise the comparison to afghanistan. obviously there were boots on the ground in that case and there have been boots on the ground in iraq previously. it seems here as you just said, though, that is not the way to handle the islamic state, that it is going to be air strikes. can you just gives us a sense of the scope and you are the ration of this likely campaign against them? >> well, i think it's going to be a larger campaign than perhaps even the president thinks of. remember, in afghanistan, we have few combat boots on the ground other than special forces. we use local militias to be the ground component along with our air strikes. the same thing in bosnia in 1995, kosovo in 1999, libya under president obama in -- and

alibis on the ground who will fight if we provide them logistics, weapons, advice, intelligence, but most importantly airpower. >> are we talking a period of weeks, months? what do you think here? >> well, it all depends on how isil reacts. if isil stops its offensive after they're hammered more from us and are not able to push forward against the kurds or the shia further to the south to the anbar sunni tribes that are fighting against them, they'll probably try to consolidate around mosul, fallujah, in that area, and have more time to carry out the long-term strategy the president laid out in june of a political, diplomatic, military campaign to have a unified iraq that is inclusive that can get the support of all groups and then chip away at isil's presence. >> mr. ambassador, thank you for joining us, sir. appreciate it very much. >> thank you. >> ambassador james jeffrey

joining us from washington. a look at the markets. art cashin just came buy biand said the bias is to the upside, more buying to come before the close here. right now the dow is up 166 points. coming up next, dominic chu round up today's big movers. and later, we're $16 billion in outflows from u.s. equity funds last week. are we seeing the start of a correction that wall street pros have been predicting? ♪ [ woman ] if you have moderate to severe rheumatoid arthritis like me, and you're talking to your rheumatologist about a biologic... this is humira. this is humira helping to relieve my pain.

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talk to your doctor and visit humira.com. yyyup. with xfinity internet soyour family can use all their devices at once. works anywhere in the house. even in the garage. max what's going on? we're doing a tech startup. we're going public! [cheering] the fastest in-home wifi for your entire family. only from xfinity. welcome back. just 15 minutes to go and the markets at the highs of the day, dow up 174 points helped perhaps by the reports as just told by art cashin. the nasdaq up 36. >> to dominic chu and what's moving these markets to wind down what has been another seesaw week, dom. >> not too shabby. a big green day on a day we thought might have been red to start. a big day for tekmira after the fda cleared its experimental ebola drug for potential use in human beings infected with that virus. stock up 38.

sotheby's moving lower after posting second-quarter profits and sales. it blamed a higher tax rate for the decline in its core earnings. off session lows, still down by. 7%. medivation. that stock up 8% off of its session highs. and we'll end with post holdings, whose stock is getting absolutely clobbered after the breakfast cereal maker cut its earnings outlook for the full year. post shares you can see down 16%. at one point it had lost just more than a fifth of its value in terms of the overall day, so not a good day for post shoulder. back over the you. >> not at all. dom, thank you for now. got about 13 minutes to go here, markets gathering momentum into the close. >> as art cashin said, bias to the upside, could be paring off.

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what have we got, ten minutes left in the trading session here. art cashin saying it's starting to pare little bit. 16,543. what a crazy rally this has been late this afternoon. the nasdaq's up 37, and look at the s&ps, the strongest of the major averages, up 21 points now, or a gain of 1.2%. joining us, our friend david darconsistent, bob pisani here. crazy. >> we know two things. the markets definitely move on ukraine and to a lesser extent on what's going on in iraq. and we know that we don't know anything. we know that we don't know how this is going to resolve itself. isn't it amazing to you that the markets move on a tweet from a russian news agency. >> i'm not saying that ear not a reliable source. i'm saying isn't it a little strange to you that the world literally moved this morning on a report saying the russians are interested in helping things

out? >> i have even a better market gauge for you. ♪ happy birthday to you >> we're talking about ukraine here! ♪ happy birthday, dear bill happy birthday to you ♪ >> we had to get you back. we had to get you back. there's only one left. >> you're late for this year but early for next year. thank you very much. thank you. >> here's the amazing news. >> thank you. coming from the great tenor in art cashin. appreciate it. >> it's your 23rd year at cnbc. >> yes, it is. >> i couldn't help but notice that july 17, when we might have had one of these last time, was the high for the market. now hampton pearson has run a test for us. if you look at the performance from july 17th to august 7th, typically the market sells off on average about 0.6%,

considerable, this year 1.9%. i told you i'd find a market gauge even more trusty for you. >> a new indicator. >> yes, we do. >> no, i'm not retiring. would you like some cake, gordon? >> it's your birthday. >> would you like some cake? >> no. >> are we even now? >> yes, we ear even. >> thank you, ralph. no, i'm not taking another sabbatical. okay? this is just a birthday thing. thank you so much. >> happy birthday. >> now, gentlemen -- >> where are we now? >> something about iraq going on. i've foorrgotten. >> going into the weekend here. i'm going to segue here. i mean, there's stale lot more to come. germany for one, the dax is still close to a key support level right now, 9,000. >> markets will be driven first by geopolitics, second by monetary stimulus, which continues, thirdly by the economy and earnings, and finally by valuations.

i would point out valuations, price to sales, price-to-book, the q ratio, which is price to replacement value, as well as the price/earnings on the p/e, they are all extremely elevated. so it's time to be cautious, keep upgrading the portfolios. that's the message that you want to imbue and imbibe on your birthday. >> unemployment numbers this week improving. trend, six-year lows in those numbers. gdp numbers improving. export numbers are good. >> people tuning in now saying why is she holding a cake? >> you didn't miss a whole lot. stick around. we'll come boack with a closing countdown, i think. that's the plan right now. but the dow is up 178 points. >> i'm going to sneak in a bite. after the bell, find out why retired four-star general barry

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see car insurance in a whole new light. liberty mutual insurance. [b♪ll rings] time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade. all right. we're going out on the high side. the dow is up 186 points right now as art cashin was saying. the bias was to the buying side. and for the week, i mean, look

at this volatility. this is this week. look at the volatility. when all is said and done, a gain of a third of a percent for the industrial average. we're watching carefully the dax in germany as rick santelli has been identifying all week, keep an eye on that 9,000 level and we finished this morning right on it. we're at 9,0909 and we'll keep an eye on that come monday, david, to see what the european markets are suffering, seeing a lot of economic weakness over there again. >> and mario dragge did not give any additional bird feed to the market, kept it nice and steady. >> but he did say the progress is the lack of structural reform over there. they're not doing anything, especially he singled out italy, not doing anything to improve their labor markets to make it easier to start jobs, move people around, taxation system. he specifically said lack of structural move is a problem. this week the slow growth or no-growth model paradigm is

reasserting itself. italy now in a technical recession. two consecutive quarters of negative gdp growth. that's a warning sign. don't forget ukraine, but independent of the ukraine, that's an issue. >> and as far as the european markets go, the german market is in correction territory, down 10% from its peak. the portuguese and greek markets not exactly the strongest markets anyway over there, but they're in bear market territory now. >> and people continuing to buy sovereign bonds of these countries, bill. we were just talking the german ten-year bond in euros yields 1.06%. switzerland is at 0.48% for money. >> who is giving the germans money for ten-years at 1%. >> it's central banks, sovereign wealth funds. that i think will keep downward pressure on u.s. heels, which will help our market here. >> you would think. gentlemen, thank you very much. have a great weekend. see you on monday. we're going out near the highs of the session with the dow up

180 points and the s&p, the strongest of the major averages today with a gain of about 22. stay tuned now for the second hour of "the closing bell" with kelly evans and company. have a good week, everybody. thank you, bill. i'm kelly evans. orion ringing the closing bell. the best session since april 9th. the s&p 500 adding 21 points, better than 1% for its best session since march 4th. and the nasdaq's up 36 today. looked midday like we would have -- all our stats guys would be about the worst week, the worst session in some time. instead, quite the opposite. joining me is our panel. to wrap up the days action on the markets, "fast money"

trader, guy. >> happy birthday, bill. >> happy birthday to mr. bill griffeth. guy, what accounts for that strong late-day reversal? >> i guess you saw some of the headlines out of russia. geopolitical stuff drives the market but a lot is technical as well. i think on monday we talked about 1,915 in the s&p being a pivot level. give or take a few levels that's where we traded. once we traded back to the upside today the market accelerated. i would imagine you get a quiet weekend you've probably got another 20 handles in the s&p. what was very interesting to me, and i'm sure sarah will be happy to hear this, is the reversal in the bond market. the 18-month high, that reverse closing lower. maybe, just maybe, the bond bears have something to put in their cap over the weekend. >> i agree, guy. that was the most notable move of the day. guy and i have a bet. he says 2% before 3% on the

ten-year yield because he's in the crazy deflation camp. but clearly there is this voracious appetite for u.s. government debt. we saw below 240 for the first time all year on the ten-year yield. much more caution in the bond market. it was interesting to see when you didn't see any kind of spike in gold or the japanese yen or some of the other traditional safe havens, that flight so safety in bonds. everyone here on the floor had their eye on that all day. you definitely see a divergence between what's happening in those low yields and what's happening in stocks. >> are you on the 3% before 2%? >> i am. >> okay. >> no, no, it's not a deflation trade, sara. it's just too much money. >> talk that out. >> look at the little community banks we've rated in the last three months. they're all coming out at 150 over the ten-year. for subdebt. >> explain in english what that means. >> what i mean is there's a lot of money looking for yield. they may be running out of high yield, but it isn't about deflation. it's about too many pieces of

green pap we are presidents on them looking for a home. that's what it's about. >> not just pieces of green paper, also colorful pieces of pap we are european figures on them. >> in germany, a record low, the ten-year almost 1%. >> yet the currency is ridiculously strong and remains so. >> mark? >> isn't the flight out of high yield really a tale of two markets? at the end of the day, most of the flight out of high yield was redemptions, right? >> yes. >> and the big money managers had built up large cash reserves in anticipation of this that are actually starting to look to buy. right? >> a retail move. >> absolutely a retail move. >> should always favor retail move. >> it's interesting, kelly, because as we were looking in the middle of the month as people were talking about retail coming back into the stock market, the canary and the coal mine leading toward correction, then geopolitical consideration took front stage -- >> whatever the catalyst, the answer was yes. >> absolutely. >> you knew this market would come back because the factors that took it down had nothing to

do with the u.s. or anything else. >> well, i don't know. i think there's an argument to be made that there is a global growth concern here. certainly what's happening in russia. >> of course. >> and the increasing trade tensions, trade wars. >> concern with or without russia, right? >> well, that would be an impact on u.s. corporate earnings and on multinationals. certainly lit slow down europe a little bit according to the economists. they're so tied to the russian economy. >> but we have yet to see that reflected in earnings of u.s. corporates, right, so there does seem to be a disconnect there between what i would agree should be growing concerns over the growth and the pace of the global economy. i just don't think we're seeing that ke re flekted in u.s. equity markets. >> not yet. >> the reality is this economy is running on half the leverage it was before 2008. >> that's right. >> so you'll have less growth. i'll give you an example. i spent time with a new business out of aig, an aircraft leasing business that fell apart. they're running that business at half the leverage they used to, 2-1, making tons of money, and

yet they told me flat out that the entire industry is like that. the manufacturers would love to see them buy more planes. but they're not going to do it. >> if u.s. consumers or the u.s. public weren't so dismayed generally about how they perceive the economy to be doing, you could argue that these conditions are about as good as you can ask for, that if you're running the economy at half the leverage you had back in the bad old days, yet we're still moving along pretty good here, it's not great but it's pretty good. >> particularly in this interest rate environment. right? >> but isn't the interest rate environment part of it? >> absolutely. >> in order, that's a gift as well. >> absolutely. >> the fact rates are so low. >> pretty good if you're a prime credit -- >> pretty good if you're a regional bank that should be issuing -- >> these are good banks, solid bbbs and better. i'm saying they have no problem raising money if this was a quote, unquote, normal environment, they'd be at 250 over the curve instead of 150. >> what we learned today is whether there's fundamental concerns about growth or not, we're still in a headline driven

higher volatility kind of market at these stretch valuations in equities where it's sell first on the head lions, ask questions later. we saw that classically with iraq with all the research saying it's obvious lay tragedy but doesn't change the fundamental geopolitical and geoeconomic -- >> when you saw the headline on the front of "the times" this morning you knew the market would end up better, right? >> had a lilt nervousness. >> guy, to your trades in just a second. again, going back to this kind of question of where are we globally, in fact, market has a nice global pmi gauge that was out today, doesn't get a lot of press but interesting nonetheless, finance arias seeing robust growth, service sectors driving global growth. interesting nuggets here, but the point is we're still in a finance-driven kind of expansion. that can be good or bad. you kind of hope it's priming the pump guy for broader strength. the more we see that's happening

the better i would think. but talk us through where you're putting money to work now if you still think the ten jere going to 2%. >> yeah, i do. today obviously a little bit of a hiccup on that. but we've seen days like this before in the tlts so i'm not that concerned yet. sara just mentioned, german yield are 1%. in my opinion for a number of different reasons, u.s. yields have a lot more to go on the downside. ask me about a trade, though. look at mcdonald's. that's about as bad comp numbers as we've seen out them for quite some time. at a certain point you have to believe it has to be priced in. i think it has to be priced in. levels we've traded down to before, i think this stock bounces. we talk about on the show all the time, lions gate. content is king. lgf had a big sell-off but it continues to hold this 28.5, 29 level. now we're back north of 32. >> did i hear some inversion chatter out of lions gate as well? >> you may have. you're the inversion girl, not

me. >> perhaps something along those lines. >> could be out there. but regardless, this is a name i think right here given what's happened and what you want to own. >> yeah. i find it interesting about mcdonald's because there's your classic whether -- it's seen as a global barometer for consumer spendin spending, weathered the recession nicely because it's low income, but we learned today it's having a lot of trouble connecting with that core customer because of taste changs, struggling fast food is no longer in. there's this new perception of healthy, especially as the economy improves. >> they've tried to change but haven't changed enough for our age group and down. we're not going to mcdonald's. i mean, face it. there's not much on that menu i can eat. >> chipotle? >> different story. >> but burger king and wendy's have held up relatively better certainly in the last few quarters. >> curious what you make of the changes that fico is making to u.s., so this is one of the big ratings agencies that for u.s.

consumers, it's a big deal what your credit score is, what your credit history has been, and now one of the big guys saying, well, we're going to take into account things like medical debt and other changes, chris. is this a positive move or one that raises alarm bells? >> it's not that so much. fico periodically changes the model. it's kind of a joke. this was recognizing reality, which is that health care costs are the cause of a lot of defaults and a lot of late phenomenon in credit reports so they are trying to rebalance. i'm not sure it helps, though, because medical costs are real costs. ultimately they have to be paid. and what happens is sometimes there's an erroneous late report for an individual, then the insurer pays it. i think that was part of what they were trying to get at. let's face it, a lot of people end up filing bankruptcy because of medical expenses, especially catastrophic expenses. >> isn't that one of the highest causes of personal bankruptcies in this country? >> that's right. >> i'm curious, is this going to have anyny impact, these changes

in the fico analysis that you mentioned, on the ability for consumers to obtain credit? >> lit push scores up, but i don't think it will help them get mortgages. lit help with credit cards, may help with autos and other types of consumer -- >> to that point, by the way, the fed has this new survey of household economics in decisionmaking appropriately with the acronym s.h.e.d. 59% of those surveyed said they'd like to become home owner, some are looking, others renting due to economic factors. there is pent-up demand for the housing market. >> no question. >> mortgages are for rich people now thanks to barney frank. next time he's on you should talk to him about that. >> what changes that? should it change? >> what changes that is stop financial repression by the regulators attacking laborers. stop the ridiculous settlements like with citi, bank of america. they'll take a third of that money and throw it at consumers. these are politicians pandering to consumers, and investors are

paying for it. >> isn't this just the pendulum swinging after swinging too far towards a mortgage for everybody, swinging back the other way? >> the victims of the crisis were investors, yet if you talk to politicians, they would pretend it was consumers. some consumers were badly hurt by foreclosure, but the numbers are tiny. what happened to all of those investors, pension funds, banks that lost tens of millions of dollars? >> don't the settlements partly go toward the relief? >> partly. >> but they don't always. >> right. >> i'm on my soapbox on this topic all the time. the shoulder pay the price on these settlements. and who are the shareholders? main street, firefighters, teachers, cann carpenters. it's crazy, false dichotomy. >> look at citi. a third of that settlement goes to affordable housing? what are we talking about? it's crazy. >> guy, aunt last word? >> i want a last word about pent-up demand for housing. there's a lot of pent-up demand for the yankees, but that doesn't mean everybody can do it. >> beautiful day out.

i mean, get outside, enjoy yourself, man. watch "fast money." hang out. >> we will. we'll wait till after 6:00. actually, we'll just wait till midnight. stick around for guy adami on "fast money." investors pulling the plug on risky assets. is it time to bail out of this risky space or is it time to pounce and buy? and on the negative sentiment we'll talk about that next. plus a new report finding alternative investments, real estate, commodities, things like that could be getting much of the money that's flowing out of stock funds. what that says about the state of this market and the asset management industry. financial noise financial noise

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welcome back. new data suggesting investors starting to avoid risk. bob pisani has the details. >> we had quite a stir this week, kelly, when it was report by lipper that we would see big outflows from high-yield funds and from stock funds.

i'm talking about moves as well as etfs. look at the numbers. that caught a lot of people's attention overnight. 7 billion outflows the largest since records began in 1992. stock funds at $15.8 billion in outflows. people asked me what this meant. the short answer is i'm not worried about this yet. look at these high-yield etfs. hy stshgs the big one, everybody loves this. down about 3% in the last month, but you can see it's recovered in the last few day, 3% isn't a huge drop. here's what's to bear in mind about these. first off they're extremely volatile. lots of money flows in and out all throughout the year. this is not that unusual. this week there was a notable decline. the price decline so far of 3% only modest. if you throw in the 5% or 6% dividend yield it's been pretty good this year, even with the price declines. here's the risk you have to be worried about. credit deterioration and a rise in rates. so far the economy is improving. there's less credit te tear ration. that's what i'm worried about,

that rise in rates. if the ten-year goes noticeably past 3%, these high-yield etfs, yields will go up, prices will drop more. depend how much the ten-year goes up. that's your risk right now. let me tell you about the decline in the jut flows from the stock funds. i understand a lot of the outflow was from a single group a single series of trades done in the spy. there it is. the biggest etf for stocks out there. it's a huge one. somebody made a series of bets this week, looks like a single person, and that's big reason why we sold the outflows. i don't know why that happened but overall we're up fractionally for the week. back to you. >> bob, thank you. more importantly, the high-yield moves seem to be signalling the way stocks go lately so the question is whether there's more of a correction coming. let's ask david seaberg from cowan and company. great to have you back. hi there. listen, whether or not it's one person or a bunch of people selling out of a high-yield

space, do we continue to take our cues for the equity markets? >> no, i really don't, kelly. we've talked about my long-term opinion of this. i think it depend on how you view the fed right now, going to depend whether or not you're buying this for the long term. i think all the geopolitical stuff and all that really, although it's impactful, is a lot of noise, you know, from the standpoint of having a real short-term or a long-term impact on this tape. >> so it's all about the fed. we've got fisher coming up on monday. >> right. >> rosenberg on wednesday? >> in new york. >> in new york. what is it about the fed specifically that you have to have in mind to know whether to buy this or not? >> no, i mean, when you look at what we're coming out of, a massive trade right now. last year you basically hung onto everything and made money. people are going through a

digestion process as the economy is picking up, but we're creeping up to a point where there's a concern about rates. if you truly believe the fed is going to be, you know, with the zero-interest rate policy for a period of time for the economy to absolutely get on its own two feet, then you're in a period where you should be buying stocks on any dip. and i'm of the opinion the fed's not going to be premature in raising rates. i'm of the opinion they're going to make sure they nurture this as long as they possibly have to. >> yeah. bringing in the panel here. we heard this this from dennis lockhart of the atlanta fed who told us -- was it yesterday, wednesday, when we were in atlanta? you know, floif reiterated his dovishness, the idea that he being a little bit of a centrist representing perhaps that point of view that they're not necessarily going to be in a rush to raise in case anyone was thinking that. >> not only, that but they don't have a mechanism to raise it. there's intense discussion going on inside the fed now, the fed in new york, what do they do? nobody trade fed funds.

they've talked about creating another benchmark because they don't have a way other than signalling to make rates go up. then the question we were discussing, how do you get a market to go up when you have this much liquidity that has nowhere to go? you have big banks like bank of new york charging people to deposit money. there are other big bank who is will put that in place. >> you think we'll see more of that? >> yes. they don't want the money. they don't want deposit growth because it's killing their asset returns. >> david? >> kelly, can i make a quick point? what scares me about this market, just to lay it on the table, i think one of your guests, maybe chris, made the point about frank dodd, the individual investor, sort of holding the bag. the corporate bond market scare mayes lot from a liquidity perspective. let's look back at what frank dodd did to the inventories of all these dealers. inventories in corporate bonds are down from '07. you know, roughly 85% where mutual fund assets are up 2x. so when rates do go up, what's

going to happen? the individual investors really going to take it on the chin here. >> last point, david, before we let you go, because we have some breaking news to get to, what do you think narps the next leg for markets just in a word? >> i'm sorry, the next what? >> the next leg for the stock market. what do you think that is? >> next leg for the stock market in my opinion i think is up. and i think it's up until the end of the year. >> all right. david seaberg, thank you on a friday afternoon for your thoughts. really appreciate it. as i mention, we have some new developments now on argentina's debt debackle with our dominic chu. dom? >> kelly, here's what we've got. the court hearing over argentina's debt situation has just finished up in about the last 20 or so minutes. i want to bring you some of the highlights from this particular hearing. the u.s. district judge said that the debt hearing was called because of that two-page legal notice ad that was put in "the new york times." he reminded argentina that he told the republic its misleading

statements must stop. he also said that its important settlement negotiations go forward in this debt dispute, also saying that ignoring legal obligation imposed by him and the second u.s. court of appeals was not something they should be going about doing, also saying that false statements do not -- if the false statements do not stop it will constitute a contempt of court order becoming necessary. the argentine lawyer from cleary gottlieb, the firm representing argentina here, jonathan blackman, said his law firm did not aid in preparing argentina's legal notice, the ad that went into "the new york times" and said the judge in this case said he was glad argentina's law firm, cleary gottlieb, was not involved in drafting this public notice. that big full-page spread a add in "the new york times" being addressed by the court in this particular hearing, he says this must stop and if it doesn't, contempt of court may ensue, kelly. back to you. >> wow, dom. thank you very much.

>> incredible story, kelly, for two reasons. one, it's extremely usual for a state actor in a proceeding at this level or any level to have that serious threat of sanctions. and the other thing for a firm like cleary gottlieb to part ways and disassociate themselves from the actions of the client. as a lawyer i can tell you you either say nothing or you endorse it. it's very unusual to take the step of say ig've got nothing do with that. >> this as argentina wants to take the u.s. to the hague over vie lightweight its sovereignty with these rulings that the judge has presided over. we'll leave it there now. the u.s. launching air strikes this morning and again this afternoon against islamic militants in iraq. is that going to be enough to protect thousands in northern iraq under siege from those militants or will president obama have to send in troops? general barry mccaffrey weighs in next. and hawaii getting hit by another hurricane and another hot on its heels. a live report from the aloha state later. in india we have 400 million people

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customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back. the u.s. launched new air strikes this afternoon against islamic insurgents in iraq. some of those bombs are destroying equipment supplied by, yes, the united states. eamon javers, how did we get here? >> hi, kelly. well, we got here because the iraqi army, which was supplied by the united states of america and with equipment paid for by u.s. taxpayers, essentially cut and ran according to u.s. military experts in contact with the isil forces, the iraqi

military melted away, leaving a lot of equipment on the battlefield. we're getting new information from the pentagon press secretary on the two usair strikes we've seen so far today. what the pentagon is telling us is shortly after 10:00 a.m. eastern time remotely piloted aircraft, that is drones, struck a terrorist mortar position and then separately at 11:20 a.m., four f/a-18 aircrafts successfully struck a stationary isil convoy of seven vehicles and a mortar position near erbil. all of that raises the prospect that the u.s. military could be in the process of destroying u.s. taxpayer paid for and financed military equipment. take a look at this humvee that photographers captured in isil hands. this is apparently an american-made humvee. the previous one looked like something out of "mad max." clearly isil is using u.s.-financed military equipment in their advance. i've been talking to military experts, including general barry mccaffrey, about what this

means. it gives them an advantage on the battlefield in the short term particularly against the kurds but the u.s. military should be able to deal with it in relatively short order. >> all right, eamon. thank you. let's get into a broader discussion on political and military strategy in iraq. barry mccaffrey joins us, four-star general. welcome to you both. general, in your opinion, is this now the beginning of an air strike campaign by the u.s. against the islamic state? and if so, how long does it last and how wide is it? >> those are all appropriate questions. we have to define the military objectives of this campaign. if it's to stop humanitarian violations, all this implies an

extended powerful usair campaign. i don't think it's going to happen. >> you don't think it's going to happen. >> no. we don't have significant military power in the area. it's unlikely the turks or the saudis or even the iraqis, for that matter, will allow a significant u.s. military movement in the country. there's probably one carrier battle group out there launching pinpoint strikes against what is largely a dismounted jihadist murderous threat. we have to support the kurdish people to defend their own interests. >> tom sanderson, am i long that the kurdish people were looking for more reinforcement from baghdad and didn't get it? >> well, they're not often looking for more from baghdad indicates establishment a homeland if not an independent state. going to the general's comments, not only do we not have

sufficient forces to do the kind of follow-on activity there, but we can't want the success of this country more than they do in baghdad, and until there is political reform, i don't think we can expect to see much more significant military activity. >> you don't think they want success here? >> i don't think he wants to sacrifice what he needs to sacrifice in order to get success. his definition of success is different from ours. and what the iranians are willing to concede here as well is another issue. i don't think we'll have a full-scale maximum effort on the part of the united states until we see more inclusion among the different ethnic groups inside iraq. and we're not there, not even close to it. >> that of course was supposed to happen, though. it's clearly not happening, so how intransigent is maliki and what does this mean for the relationship between the u.s. and him but also with iran? >> well, things have been looking very bad for maliki with people inside his own party saying he need to go.

so he may, in fact, end up going if he gets his wishes of protection for his family, immunity from prosecution and a huge security detail. but who follows him, of course, is what matters. and the influence that the iranians have over this individual also plays a big role here. so, so much remains to be seen. it's very difficult to project what our commitment will be without a settled political environment here. and also not knowing what sort of advances isis is going to make. >> and general, finally to you, what do you think the pros pepgts are for maliki stepping down, who replaces him and how much of that is standing in the way of a broader effort by the u.s. to launch more air strikes against the islamic state? >> well, look, you know, i think i would argue maliki is reasonably unimportant. iraq has already come apart and won't be put back together. the kurds won't let the iraqi army into the north for a thousand years to come. the sunni portions of the

country have already spun off. it's hard for me to imagine this effective shiite army and police force regaining control. my argue suspect we're going to watch this throughout the middle east, this pre-world war i boundaries re-establish themselves in a new format and it's going to be done through violence, not parliamentarian procedures. >> even if they do, that it's one thing to erase the borders that were drawn in the aftermath of world war i and beyond. it's another thing for this group, specifically the islamic state, making the gains it's making, using the tactics it is, threatening the populations in a the way that it is, general. this isn't necessarily an article about political boundaries, is it, but an argument about potentially the safety of these people. >> well, it certainly is an argument -- i would agree with your point, actually. i think you've got to stand with your friend. you have to support the kurds. you have to let it be an independent or autonomous state. it isn't going to be inclusive

or the next guy, shiite, is not going to be inclusive. the sunnis won't trust them for a thousand years. these parts are splitting apart, splitting asundayer. i do think isis is a threat to the american people and western europe. we've got to deal with it but probably not through small numbers of naval air strikes and three aircraft dropping water and food to 50,000 people on a mountaintop. >> exactly. yeah. you get the sense of what more may be to come. we'll leave it there, gentlemen. have a great weekend. tom sanderson and general barry mccaffrey. despite the recent downturn, the s&p 500 is still up 4.5% this year. that's nothing compared to the red-hot gains in real estate investments, know. our diane olick as the details next. and the nfl is kicking off its preseason last night, but it's not business as usual for the league, which could see a huge ownership shake-up this year. the impact that could have on your favorite teams.

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welcome back. real estate investments may not be quite as exciting as other stocks lately but they're dramatically outperforming pretty much everything else so far this year. our diane olick is here to explain how and why.

diana? >> well, kelly, just combine low interest rates with very solid fundamentals and it's easy to see why commercial real estate has been a great play. real estate investment trusts have seen very strong returns year to date. take a look. u.s. equity reits return 15g% year to date with a dividend of about 3.5%. compare that to the s&p 500, which is up around 4% with a dividend yield of 2%. apartments are still the top pick despite concern last year of potential overbuilding. freddie mac is reporting that supply of new units are being absorbed and fundamentals should be strong for at least the next two years. they point to nearly 4 million potential households that were not formed due to the great recession. now, those accounted for close to 75% of those were young adults and over the next decade close to half a million rental apartments may be needed each year to meet that new demand. office is still a bit mixed but analysts are even bullish on

regional malls which had been underperforming but which are now improving. now, another great sector is student housing. we reported on that one recently, and if you want to learn more about that, there is a link to it in today's reit story on cnbc.com. you can go to that. but one warning from analysts. they do not expect to see the double-digit reit returns in the second half of the year we saw in the first because they are worried about rising interest rates. kelly? >> all right, diana. thank you. reits aren't the only alternative investment, by the way, that could boost your portfolio. and that's according to consulting for mckinsey, alternative investments represent one of the largest growth opportunities, command of up to 40% of global revenues by 2020. for more, let's bring in their senior partner. welcome. >> hi. >> it's going goimoney going in this space because it's done so great or there's nowhere else to put their money? >> we think the drivers behind the growth are structural,

including retail excess, towards linking investments to outcomes such as low collated returns, income and inflation protections but it's more structural than cyclical. >> what do you think's driving it, chris? >> it's just returns. you can't get any -- even retail -- >> doubled in five years -- >> well, it's a market that's doubled in five years but with a lot of the retail population out. >> hedge fund stocks have bids, and they're still considered one of the places where these people want to be, right? >> absolutely. i think there has been some change in the alternative space as well. but today some of the investors look at these alternative assets as predictable consistent returns. >> we talk about hedge funds on this show, why am i investing in a fund? am i investing for alpha? as a true hedge to other elements of my portfolio? it's very true, hedge funds have

underperformed, and we've talked a lot about that significantly, hedge fund have significantly underperformed in the past 12 months or longer, but again, you have to think of why we're investing. i'm curious to know your thought. democratization of hedge funds -- >> especially now that they can advertise to almost joe public. >> although nobody's done it yet with the exception of one or two. do you see the same proliferation of 40 act funds and investment companies as i do and duktd that trend to continue? >> absolutely. liquid alternatives are alternative strategies that package as funds continue to grow. and we believe the retail adoption will continue. >> notwithstanding, like, there's been some evidence of a edge or strategy decay as you try to take an alternative product with much significant, lower liquidity constraints into the 40 act rubric? >> i have no idea what you're talking about. i will quid ti to -- >> not make as much money as

retail products as they do a limited partnership. >> oh, got it. >> sorry. >> in packaging these strategies on their different vehicles like 40 act funds, you might need to make certain changes down the line, liquidity and investment strategy. but for the most part so far they have not seen huge issues with the performance. >> would it be wrong to consider this sort of the cover your rear strategy? in other words, if you're a fund manager, a portfolio manager institution, and you have to show quarterly performance, you're worried about historic volatility in the stock market, you think that bonds look too risky and this is a way of kind of going and saying, look, i'ming to something smart and sophisticated that should give us a better return even if to your point it doesn't? >> and you have to pay higher fees. >> i think there are different reasons why investors invest in alternatives. it's hard to generalize. but one of the reasons is diversification. another one is, again, some of

these other outcomes whether it's income or inflation protection. another, in my view, tool in the tool kit of the investors. >> a great point. by the way, the name of the report is the trillion-dollar convergence and it does represent kind of the retail and more sophisticated audience. we'll leave it there. thanks for stopping by. >> thank you. thanks for having me. well, paradise pummeled for only the second time since 1950. hawaii hit by a hurricane, and a second storm may be hot on its heels. we'll get the late frst from th south pacific next. and are you ready for some football? the nfl preseason kicked off last night. some of the biggest action is happening in the owner suites though. dominic chu has the details.

nbc's jennifer bjorklund is in oahu with the latest on the storm. how is it there, jennifer? >> reporter: hi, kelly. we are here where the wind is really picking up on oahu. they're expecting potentially 6 to 8 inches of rain as the moisture has stalled. tropical storm iselle blew in, hit landfall at 2:30 this morning local time on the big island. in a turtle sanctuary populated by about 1,300 visitors and residents. they are now cut off completely. the roads are flooded. they have no power. they have no water. but they could visibly see the

bands of the storm in the clouds, in the sky followed by lightning and thunder and up to 11 inches of rain on the big island of oahu, and that is what -- or the big island of hawaii. we're on oahu. what they're concerned about for all the island is the flooding that will happen because the storm system as it's even moved offshore again and it's out over the water is causing a lot of rain. it's bringing a lot of moisture onto all the islands. so we are under flashflood warnings and watches all day today. kelly? >> all right, jennifer. thank you for now. we'll be watching. always an operatic feel it to, julio chasing iselle to the hawaiian islands or something. it was sweet revenge last night even though it didn't really count. the denver broncos faced the seattle seahawks in a rematch of february's super bowl last night. this time the broncos prevailed. so can the seahawks repeat when it comes to the super bowl this year? go to cnbc.com/vote.

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the nfl kicked off its preseason this week at a time the average nfl team is worth almost $1.2 billion. with only 32 team, nfl ownership is a very elite almost $1.2 billion. but the clubhouse is on the brink of some major changes. >> well, that price is a paper value. who knows what happens when the franchises actually come to market. they could go for a lot more. that's why the bills' option is getting a lot of attention. some big names possibly in the mix, donald trump. jim kelly. jeffrey gundlach. terry pegula.

that's what mike newberg thinks. and bon jovi, the rocker, as well. over the past year, there have been the passing of some iconic owners in the league. the bills' ralph olsen. the owner of the tennessee titans. his family trust is maintaining that team as well. and not just because of these things. so many off the field things happening. jim irsay of the colts, facing charges. and pat bowlen from the denver broncos stepping down.

possibly scandals with the browns and the cowboys as well. the giants, $1.6 billion. the texans, $1.5 billion. again, these are paper values. who knows what will happen. if the deal goes through for $2 billion for the clippers, who knows what the cowboys would be worth. >> well, can you talk a little bit about their profitability? >> well, we have a guest, can you repeat the question? >> rick, how profitable are the top five or six nfl teams, and how do you value them? >> it's like buying the mona

lisa. the teams want to be valued at the highest number possible. only 5% of the teams have changed hands in the last ten years. 32 teams, and only a couple of them. bottom line, some metrics. each team makes $250 million a year. attendance has gone up 1%. looking at the metrics and understanding that tickets and television is shared, 65% to 80% of the revenue, you're buying one 32th of the giant business.

>> again, rick is absolutely correct. you are buying one piece. there's only -- this is fixed. we talk about real estate being fixed. they may have some more teams coming down the line. but this is a league highly, highly profitable and concentrated in terms of ownership. >> go ahead, rick. >> i just want to add one more piece to this. the owner of the sabres, $1.03 billion. he thinks he should get it. i'm starting my down payment. here's my $20. i'm in the race. >> and they're great investments, and they seem to

appreciate to the moon. >> rick, a last word? >> never sold for less than what they're worth. that's the most important piece. >> thank you, guys. earlier we asked you whether the seahawks could repeat as super bowl champs. here are the results of the poll. they're still coming in. no, seems to be the overwhelming answer. a look at what's coming up next week, we'll be right back. machines will be sprayed to be made. and making something stronger... will mean making it lighter. one day,

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welcome back. time for a quick final thought. mark will start off. >> i think this week will be very interesting to see if the bull run continues. i happen to think it will continue. russian tensions easing. hopefully another cease-fire in israel. maybe it's just the nice weather. we'll wait and see. >> chris? >> lots of uncertainty, but rates are going to stay low.

we should relax. too much money out there, and it's all coming to obvious and not so obvious places. >> good thing, bad thing? >> well, less leverage and less job growth. >> and sarah? >> check out my piece on cnbc.com. adult diaper is a hot growth area. way faster than baby diapers. a $7 billion business. ageing boomer population is happening. it's no joke. and unfortunately, 86% of incontinence buyers are female. on a different note, next week,

federal reserve. we have to mention the fact, we don't have a policy meeting. but we will hear from people in new york, perhaps will move the market. >> thank you for watching this hour. "fast money" is coming up, with mandy sitting in for melissa lee. indeed, "fast money" is starting now. our traders tonight, good to have you with us, guys. our top story, the headline-driven rally. the s&p and dow turning positive for the week. word that russia's military exercises near the border have eased. and the